On July 12th, it was announced that 91 additional ETFs will be added to the Mainland China-Hong Kong ETF Connect Program, effective July 22nd. This expansion increases the total number of ETFs in the program to 241, with 19 managed by E Fund Management, China's largest fund manager. The expansion highlights a significant rise in foreign investor demand for tech investments, with the electronics sector attracting US$1.58 billion in northbound inflows in Q2.
Enhanced Investment Tools for Tech Innovation
The newly expanded ETF Connect Program offers offshore investors enriched tools for tech innovation investments. Notably, there are more than 20 thematic ETFs available, including three from E Fund: E Fund CSI Artificial Intelligence Thematic ETF, E Fund CSI Cloud Computing & Big Data Index ETF, and E Fund CSI Technology 50 Index ETF. These ETFs provide comprehensive exposure to China's growing AI and tech sectors.
Detailed Index Exposures
- CSI Technology 50 Index: Focuses on 50 large companies in Shanghai and Shenzhen, with 59% in IT and communication services.
- CSI Artificial Intelligence Index: Covers the entire AI value chain, emphasizing computers, electronics, and technical services.
- CSI Cloud Computing & Big Data Index: Targets upstream computing devices and downstream applications, with over 50% in the computers industry.
E Fund's Leading Role
E Fund's ETFs are notable for their size and impact. The E Fund CSI Artificial Intelligence Thematic ETF and E Fund CSI Cloud Computing & Big Data Index ETF are the largest in their categories, with net assets of US$798 million and US$153 million, respectively, as of July 15th.
About E Fund Management
Established in 2001, E Fund Management Co., Ltd. is a leading fund manager in China, managing close to RMB 3.3 trillion (US$ 454 billion). It serves a diverse client base, including central banks, sovereign wealth funds, and insurance companies, and is a pioneer in responsible investments in China.
Industry Implications and Future Outlook
The expansion of the ETF Connect Program is set to further integrate Mainland China’s and Hong Kong’s financial markets, facilitating greater cross-border investment flows. This move aligns with China's broader strategy to open up its financial markets and attract foreign capital. The focus on tech-related ETFs underscores the growing importance of technology and innovation in China's economic growth, providing investors with more opportunities to participate in the country’s tech boom. As the program continues to expand, it is expected to enhance market liquidity, provide better risk management options, and attract a wider range of international investors, ultimately contributing to the stability and development of China’s financial markets.